Salient Highlights

The Pune Municipal Corporation (PMC) became the first municipal corporation in the country to tap money through municipal bonds in 14 years. The AA+ rated PMC’s municipal bonds raised Rs 200 crore at 7.59 per cent rate at the Bombay Stock Exchange (BSE).

This is the first-ever mobilisation of debt capital by a municipal corporation on the BSE BOND platform. This will also be the first issuance since the publication of ‘Issue and Listing of Debt Securities by Municipalities Regulations, 2015’ by Securities and Exchange Board of India (SEBI).

The 10-year bonds will be used by the Pune Municipal Corporation (PMC) for a Rs 2,300-crore water project. The scheme is aimed at providing water 24×7 for all residents of Pune.

Pune Municipal Corporation (PMC) was assisted by the US Department of Treasury to create a debt policy. PMC has also planned to prepare a case study based on its experience and share it with other urban bodies to help them raise money from the bond markets.

Since the bonds do not have any guarantee from the state government, an escrow account has been created to deposit the funds for the comfort of investors.

Municipality Bonds

Municipality bonds can be issued by the city corporations to fund developmental projects. Institutional investors, as well as the public, can buy these bonds. The corporations can use the revenues earned from the developmental projects like Metro rail network to repay the interest and principal on these bonds. These municipal bonds have now been permitted for public offering by SEBI.

Municipal bonds have been in existence in India from the year 1997. Cities such as Ahmedabad, Bengaluru, Nashik and Madurai have already issued them. These bonds will help the city corporations to directly raise funds without the help of grants from the state governments or agencies such as World Bank.

The 30-share BSE Sensex has reached an all-time intra-day high of 30,567 breaching its previous intra-day high of 30,366.43 touched on May 11. The technology, power, FMCG, IT, consumer durables and healthcare that leads the BSE sectoral indices had made gains up to 0.66 %.

The National Stock Exchange index Nifty did not disappoint either by gaining 0.39% to reach a new high of 9,507.40 surpassing its previous intra-day high of 9,450.65 reached on May 11.

The good performance of the indices were due to upbeat sentiments backed by robust foreign fund inflows and encouraging earnings by some blue-chip companies, besides the overnight gains in Europe and the US markets.

Stock Market Index

A share market Index shows how a specified portfolio of share prices is moving in order to give an indication of market trends. It is a basket of securities and the average price movement of the basket of securities indicates the index movement, whether upwards or downwards. BSE Sensex is one index. The BSE SENSEX is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange.